There Are 66,719 Empty Mansions In Vancouver

Tyler Durden's picture

One year ago, when we first started discussing the Vancouver housing bubble, which as we first speculated - and was later confirmed - was the result of Chinese oligarch money-launderers parking "hot cash" in this offshore housing market (at least until a 15% property tax on foreign purchases made Seattle the new Vancouver), we said that Vancouver houses had become the de facto new Swiss bank account, and because of that the houses - once purchased - would remain a highly overprized, if vacant tribute to China's soaring capital outflows.

Now, courtesy of data by urban planner Andy Yan of Simon Fraser University’s City Program, this has been confirmed because according to the latest census numbers, as of 2016 there were 25,502 unoccupied or empty housing units in the City of Vancouver. Expanding to include the entire metro area, Yan found that vacant or temporarily occupied dwellings have more than doubled since 2001 to 66,719 last year as neighborhoods have hollowed out.


A home sits empty, and awaiting demolition, at the corner of Parker Street

and Victoria Drive in Vancouver on Wednesday

Yan compared census data for Vancouver over several decades to see how the percentage of “unoccupied” units or ones “occupied solely by foreign residents and/or temporary present residents on Census Day” has doubled during that time the Vancouver Sun reported. In 1986, it was 4%. By 2016, it had doubled to 8.2%.

“Exact definitions and measures have changed slightly over 30 years and patterns should be interpreted as directional,” Yan writes in a report released Wednesday. 

The number of Vancouver's prized, if vacant, mansions far outstrips other municipalities with 25,502 units that are either unoccupied or owned by temporary or foreign residents.

Yan said most of these were concentrated in three areas: Coal Harbour, Marine Gateway and Joyce-Collingwood. Surrey came in second at 11,195, Burnaby at 5,829 and Richmond at 4,021. The focus has clearly been on the most expensive neighborhoods: the number of unoccupied units increased 25% in Richmond between the 2011 and 2016 census and by 28 per cent in Burnaby.

To take advantage of this multi-million mansion ghost town, in November 2016 the Vancouver city council voted to approve a tax on empty homes, the first in Canada. Based on self-reporting owners, the tax is a one-per-cent charge on homes that are not principal residences or are not rented out for at least six months of the year. The goal was to improve Vancouver’s tight rental vacancy rate of 0.6 per cent by encouraging owners of thousands of empty units to offer them up for renting.

Last Thursday, Vancouver Mayor Gregor Robertson said that "it’s unacceptable for so much housing to be treated as a commodity," even if, ironically, it was the government's own actions which allowed the city's houses to become an offshore piggybank for wealthy Chinese. "Housing is for homes first, and as investments second. Vancouver will continue to do all it can to maintain and protect affordable homes, and pursue all tools available to ensure the best use of all our housing."

As Bloomberg adds, concerns are growing that the Pacific Coast city is turning into a playground for the rich as luxury real estate squeezes industry and prices out the middle class. The provincial economy leads Canadian growth and job creation, yet its public schools are suffering from declining enrollment and households earn below the national median. Businesses using Canada’s largest port struggle to carve out space, while low-wage service sector jobs cater to wealthy retirees and tourists.

While policymakers and real estate experts are calling for more housing supply and greater density near the city center to boost productivity and temper prices, the latest census figures show the opposite may be happening.

Meanwhile, as a result of the influx of Chinese money, the number of residents on Vancouver’s west side, long favored by families and an easy commute to downtown, has fallen 3% since 2001, in contrast to 5% growth in population across the whole city, Yan said. The reason: median single-family house can cost as much as C$4.9 million in that area - about 65 times Vancouver’s median household income. And while the local population can no longer afford houses in the area, last year David Eby, a member of British Columbia’s legislative assembly, identified C$57.1 million worth of residences bought by students reporting no income in his west-side district of Point Grey.

Such neighborhoods "have become just luxury items like Ferraris," said Yan. "They’re not affordable for most local incomes."

The bad news for wealthy Americans, if only in Seattle for the time being, is that they will be next to feel the wrath of China's billionaire "students" gobbling up any and every multi-million dollar house, unless of course the PBOC is successful in halting China's unprecedented capital outflow.

It also remains unclear if home sellers in the US Pacific coast accept bitcoin as payment.

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Raffie's picture

WOW, but when will the price drop on that surplus?

I know people working construction in Seattle. They can not find enough workers locally and are trying to hire out of state. He's the rub, due to cost of living and very limited places to rent, most people moving there for work will either work to exist there and never be able to save money or end up losing money.
In Seattle you need about $28hr to have SOME money left to save. Seattle is deflate in time and when it does it will be epic.
MicroSoft and Boeing power Seattle. Boeing is a highly flickled market and there is news that have mentioned Boeing due to have multiple layoffs in 2017.

 

Stuck on Zero's picture

Walk around the homes of Newport Beach/Lido and they're empty most of the time.  The owners only stay there a few months of the year. Meanwhile, the most expensive home in San Diego has never been visited by its billionaire owner. It's kind of a quirk that the most desireable neighborhoods throughout the world are almost devoid of residents.

Raffie's picture

Back in the mid 80's to mid 90's I did construction in S Calif.

Many jobs at Newport beach and OMG take about expensive.

It's all gone. The fish rots from the head down.

toady's picture

I was having this conversation about the Phoenix market the other day. My exurbs has 30 houses, and seven have been empty since '07. Five more have gone in and out of the rental market during that span, and three of those have been trashed so badly that they've been remodeled, some multiple times.

But I guess the point is the ones that never make it to market. If investors (more likely banks) keep them off the market, the market never adjusts to reality.

If those Vancouver mansions had to be sold, the prices would collapse.

Scottsdale and Paradise Valley (the Phoenix areas "rich neighborhoods") are littered with empty mansions. Check out the Sotheby listings. They just sit there, the prices never go down. Waiting for the next lottery winner.

greenskeeper carl's picture

There wa a neighborhood around a golf course I used to play at a lot near the east coast of central FL. Over a third of the houses were empty, and they were still building new ones. I got paired up with a guy who lived in one, and he said they build them and sell them and then they just sit there. Luckily for him, there was an HOA that required the yards and houses to look neat, so whoever owns them still has to pay someone to take care of them. Some of them only get lived in a couple months a year, some not at all

 

Im surprised that tax had much of a chilling effect. If I'm reading the price increases correctly, they have been going up by 15% plus every couple years at minimum, right? If thats the case, and if the purpose is parking hot money outside of China, you wouldn't think that would be too big of a worry.

Stan Smith's picture

    I know first hand that banks and funds all over have 10's of millions of dollars of inventory (good and bad) that probably should hit the market.   Problem is,  flooding the market, especially if it appears to be a down turn on the way.   This varies by market obviously, some worse than others.

    I will say that Vancouver now is fairly similar to Vegas, and to some degree Phoenix, from 7-8 years ago.    Lots of investors from the Coast (L.A. / S.D. / S.F.) parking money in real estate "investments".    The investment from China in Vancouver is somewhat unique simply because of the culture there, but more importantly the tax advantages for wealthy Chinese folks investing abroad.   Vancouver has been a willing accomplice.  

   There's tons of homes/houses/condos/coops in the hands of investors simply biding their time.    We'll see what happens.

InternetToughGuy's picture

Who is paying the property taxes?

toady's picture

That's my question! 

I think the ones that tried renting were owned by regular humans, people who had to pay taxes and/or a mortgage. 

The ones that sit there must be owned by super humans  (banks/other financial institutions) that can slide threw a loophole or two that their congress critters put in place for them (for a nominal fee, I'm sure...)

sun tzu's picture

If I could afford a mansion, why would I move to that hellhole 120 degree desert?

toady's picture

I'm not pitching the place, I hate the heat myself, I'm just saying that there are thousands, if not tens of thousands of empty houses in every major city that are kept off the market to keep 'RE prices inflated. 

GotGalt's picture

sun tzu - I get what you're saying.  I for one absolute HATE Phoenix.  One side of the family is there, and I just hate visiting there.  But Paradise Valley is for sure nicer, up in the hills, nice views of the city and surrounding desert.  Also, a mansion there is a slightly different price than a mansion in say Beverly Hills.  A pretty nice property in Paradise Valley runs a bit north of $1,000,000.  That's a lot of money to be sure.  Yet, that $1,000,000 will buy a shack in most of the US top metro areas like Los Angeles, San Francisco, New York, Boston, etc.  So there is that.

83_vf_1100_c's picture

They are called snowbirds. The weather is quite nice in the winter. Come summer you go back North to your other mansion.

GotGalt's picture

toady - I have a family member who lives in Paradise Valley, and I've been there several times to visit.  Just my take, but the houses in his immediate area all seem to be occupied.  I have to agree though that it is a nice area.  Amazing views from those places.

Trolly McTrollface's picture

I talked to this Canadian guy from Ontario who said his family bought about 100 houses in Phoenix after the financial crisis. I really don't agree that one should be able to do that as it undermines sovereignty. I can't even imagine what one would do with 100 houses. Massive management logistics.

toady's picture

Property management is big business around here. There's nearly as many property management companies as there are payday loan storefronts! 

sagramore's picture

If those Vancouver mansions had to be sold, the prices would collapse.

And now you know why Trudeau is ragging the puck on legalization.  The tongs are keeping Vancouver afloat right now.

 

 

TheRideNeverEnds's picture

Nice homes are not for living in, they are investment vehicles. You don't buy shares of SPY to live in, you buy them for the free money.

CheapBastard's picture

Looted money (aka, free money) has to find a home somewhere.

A place/country with: 1) no oversight; 2) cooperative NAR; 3) fairly nice (like HongCouver);  4) cooperative local gubmint and 5) little or no obstacles to entry (such as a purchase tax, etc) --- these places are perfect for storing Loot.

Drug money finds its "investments" in Miami. Chinese Mainlander gubmint officials find it in HongCouver, SF, seattle, etc.

Odd how the self-righteous Libtards in SF and Seattle are so concerned with Trump's ethics, etc, while they never refuse all this Loot flooding in from overseas.

That's odd.

HRH Feant's picture
HRH Feant (not verified) TheRideNeverEnds Feb 11, 2017 6:16 PM

The problem is the Pacific Northwest / marine climate is harsh.

Empty houses rot from the inside out. Once the walls are infested with black mold the only option is a tear down. You can't remodel your way out of toxic mold.

The only way to keep a house in good condition in that climate is to live in it and keep up with maintenance.

Absent owners and rotten properties don't surprise me. It looks like Seattle will be the next place to be robbed blind and left with blight.

Trolly McTrollface's picture

Since Vancouver now has a 15% foreign buyer tax plus prices have been pushed through the roof, foreign dirty money is now flowing into Seattle and other places. You really don't want to become as dysfunctional as us. Fight the invasion.

August's picture

>>>You really don't want to become as dysfunctional as us. Fight the invasion.

Eminently sensible... but that makes both of us racist troglodytes. 

As long as the bankers, real estate agents and speculators are happy, and generous, who gives a fuck about the majority of the actual residents?

BarkingCat's picture

I hope so. I own a house there and want to sell it to some Chink absentee investor for multiple of what it is worth.

sun tzu's picture

Except stock indexes don't constantly need to be repaired and renovated and you don't have to pay property taxes on them. Empty houses tend to fall apart even faster.

Yog Soggoth's picture

I'm still stuck on, "you call that a mansion?"Our mini mansions far inland are bigger than that. Sounds like an investment opportunity to me though. Inexpensive summer homes for Florida#tag.

Ink Pusher's picture

The last time the Canadian bubble went pop, it cost a whopping $69 Bn CAD !

They did everything they could not to call it a "bail-out" ...but it was.

 

 

Ranger4564's picture

Much of the priciest properties in NYC are temporary residences for the owners... they own 3 4 5 or more properties in NYC alone, and they own properties in other parts of the country / world... so those who have money, they buy whatever they want and often it's opportunity. Some of the properties in NYC have never been lived in. They're multi-million dollar apartments, which are investments or tax breaks. Nothing unusual about what's happening in other areas of the country except, when you own an entire house on land, they require routine maintenance, apartments, they are typically only exposed on 2 or 3 sides, and the maintenance is mandated by the city anyway.

sun tzu's picture

Homes are never net positive tax breaks. You get a deduction of 20-30 cents for every dollar you pay for mortgage interest and property taxes. Mortgage interest deduction phases out after the mortgage balance hits $1 million. 

Chris Dakota's picture
Chris Dakota (not verified) Raffie Feb 11, 2017 10:23 PM

Same situation in San Francisco.

The only ones who make it work are Mexicans.

Someone in my area said they say in Spanish at a laundromat "Roommate $200 per month"

Going rate here is about $900 per month, you must be sleeping bunk beds with 6 other people.

Chris Dakota's picture
Chris Dakota (not verified) Raffie Feb 11, 2017 10:39 PM

I think you are going to see many companies leave America.

This will open the door for new patriotic companies to flourish.

Trump will punish those who leave, they won't be able to sell in this market.

J J Pettigrew's picture

Here comes the inflation that will cave your head in.....just starting

kommissar's picture

i grew up in seattle, and i'm 54 now.  i can't afford it anymore, and live near portland, or, which is also outpacing my income.  seattle is not what it was.  there have always been issues with the geography: swamps, sloughs, rivers, lakes, etc. make it impossible to build roads, even if the kommunists running the place wanted to.  

boeing is no longer a primary driver: m$, amazon, and associated software companies are.  boeing moved to chi town 20 years ago.  get real.  now all the chinese are moving from vancong to sea, and that just makes things way worse.  

i grew up in bellevue, which used to be where all the boeing engineers, and white collar airplane ppl used to live (my dad worked for faa).  we were all there, cuz bellevue schools were about as good as it got, even if housing was a bit more expensive.  for quite a while it's been pretty much china town, also probbly owing to the schools.  

Buck Johnson's picture

This is going to end real badly for everybody.  Seattle is going to go hard trust me.

 

Ben A Drill's picture

Rains to much. Women are beautiful but stuck up. Not on my bucket list.

monk27's picture

Yeah, I was thinking along the same line. Way too much rain in Vancouver (about 9 months in a normal year) to invest in a house made of wood and drywall. But hey, don't let reality intrude between suckers and their money...

P.S. The nice women are mostly Asian with just a few East Europeans. The local ones are all crazy bitches with an attitude... and use to drink like a sponge. Don't say you haven't been warned...

LoveTruth's picture

"... The local ones are all crazy bitches with an attitude..." It is all due to the new culture of faminization and homosexualization of society. Next thing is women will be growing beards, foggots will be walking around with big silicon tits, the society already is prepared to get to the new norm. 

(No wonder Putin is so popular among the normal human beings on Earth)

Quantum Bunk's picture

yep local women are fuct up. I imported one.

Chris Dakota's picture
Chris Dakota (not verified) ZD1 Feb 11, 2017 10:18 PM

I hate that shit, any kind of long hair on men makes me cringe now.

Laowei Gweilo's picture

next thing? i've seen women with beards in Van lol trans umm trans-born-women that are taking hormones or something to grow beards i guess? i've seen a few lol

SRV's picture

Most are former Ontario snowflakes who moved there 20+ yrs ago...

ebear's picture

Asian women are feminine, as opposed to feminists.  That doesn't make them stupid, just more attractive.  Bear in mind though, they are marriage oriented and will roll that out sooner than the average white chick with career goals.  Be nice. Don't waste their time if you're not serious.  The clock ticks louder for them in their own culture which prizes youth and future child bearing over professional skills.  That's a big IN if you're a white guy, BTW.  Over 30 is over the hill for Asian women as far as their men are concerned.  Not so much for us, but again, don't waste their time.  Yours either.  If it's not working, move on.  Lots of fish in the sea.

Laowei Gweilo's picture

the summers are usually pretty nice not much rain the last few years.

everywhere in BC rains a lot in the spring anyhow.

and I'd take rainy winters over snowy winters lol

ebear's picture

"Women are beautiful but stuck up"

Well, yeah... if you're going for special snowflakes or SJW's, but most of them are butt ugly anyway.

Asian girls?  Different story.  Got a car?  Good job?  Nice apartment?  It's on nigga.

Laowei Gweilo's picture

white Van girls: 'do you promise to love me as your equal'

asian Van girls: 'do you promise to pay your mortgage on time'